Credit Conditions Survey - 2008 Q3

This quarterly survey of banks and building societies is aimed at improving our understanding of trends and developments in credit conditions.

Published on 02 October 2008

Lenders reported that they had reduced the availability of secured credit to households in the three months to mid-September by more than they had anticipated in the Q2 survey. Expectations for house prices and concerns about the economic outlook were reported to have been factors contributing to this tightening. A further decline in secured credit availability was expected over the next three months.
Unsecured credit availability to households was reported to have been reduced in line with expectations three months ago. Lenders anticipated a further similar decrease in unsecured credit availability over the next three months.
It was reported that corporate credit availability had been tightened over the past three months, by more than had been expected in Q2. A further reduction in corporate credit availability was anticipated over the next three months.

Demand for secured lending for house purchase and for remortgaging was reported to have declined sharply over the past three months. Lenders expected that demand for secured lending would fall further.
Demand for credit by private non-financial corporations had fallen over the past three months, and a further decline in demand was anticipated. Reduced demand for lending for capital investment, for mergers and acquisitions, and from the commercial real estate sector had contributed to these falls.

Overall spreads on secured lending to households were reported to have been unchanged over the past three months. Non-price terms on secured lending were reported to have tightened, with further tightening expected.
Lenders reported a further widening in spreads on corporate lending, which was greater than had been expected in Q2. They expected spreads to increase further.

Default rates, and losses given default, on secured lending to households were reported to have risen over the past three months. Lenders expected a further increase in both default rates and losses given default.
There was a larger than expected increase in defaults on unsecured lending to households. Default rates, and losses given default, were expected to increase further.
Lenders reported that default rates, and losses given default, on lending to private non-financial corporations had increased over the latest three months. A further rise was anticipated over the next three months.